Utmost good faith

Materiality and the right to avoid

Drake Insurance plc v Provident Insurance plc decided on 17 December 2003, forthcoming in [2004] Lloyd’s Rep IR, is a landmark decision on the doctrine of utmost good faith. It clarifies the meaning of materiality and inducement in circumstances where the facts are not quite what they appear or are believed to be. The case also deals with the contentious matter of whether there is any form of restriction, imposed by the continuing duty of utmost good faith, on the insurer’s right to avoid. There are, in addition, important comments on the meaning of waiver. As will be seen, the Court of Appeal reversed the decision of Moore-Bick J at first instance, and held that there was no right to avoid in the circumstances of the present case.